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How to avoid being audited by the ATO.

Article by Emma Warren

None of us like to admit it, but the Australian Tax Office (ATO) are terrifying. 

They are faceless ghosts… We never see them. But we fear them. And rightfully so. The ATO have an enormous amount of power. 

Whilst we want to achieve the greatest tax outcomes, we also want to avoid having an audit conducted into our business’s financial affairs. 

If you make smart and considered decisions regarding your bookkeeping and accounting, you should be able to dodge any sort of serious assessment into your business. 

What triggers an audit into your business?

Sure, the ATO might state that they randomly audit small business across Australia. However, the reality is that they are more likely to target specific business they suspect have been a little cheeky over the financial year. 

Some businesses might be unluckily randomly selected, but most will be chosen purposefully for an audit. 

The ATO have a digital flagging system which allows certain business activity to be highlighted for an audit. 

 

Triggers that might draw attention to your small business include: 

What happens during an ATO audit?

During an audit, the ATO might call you, write to you, or visit you in person. 

They will often require access into your document management system to identify whether your lodgements have been fully-reflective of your business activity. 

You will need to have all of your receipts, invoices and documents ready to present to the ATO. We recommend having receipts for the previous five years handy. 

The duration of an audit will depend on how large your business is and how significant your tax errors have been. In most cases, if you have been doing everything in an organised and legal fashion, the audit will be finalised relatively seamlessly. 

How to avoid a tax audit.

Avoiding a tax audit is easy with qualified accountants and bookkeepers on your side. 

The Rumpel bookie team works directly with your tax accountant to ensure that all lodgements made on your behalf are accurate and seamless.

With the digital accounting software that Rumpel provides, all of your documents will be stored in a simple and systematised manner. Our experienced account managers manage your BAS preparation and lodgement so that errors are eliminated. 

Not only will registered tax agents be able to avoid the likelihood of an audit, but they will reduce the amount of pain caused if the ATO do decide to investigate you.